Question

Southern Industries uses job order costing. The following information was drawn from the Company’s monthly accounting reports: Job 1 Job 2 Job 3 Direct Materials $ 50 $ 60 $ 30 Direct Labor 20 30 10 Southern applies overhead at the rate of 200% of direct labor costs. By the end of the month, both Job 1 and Job 2 had been completed and sold. Job 3 was still in process. At month-end, what was the balance in the Work in Process inventory?

Answer 1

Answer:

The balance in the Work in Process inventory at the month end is $60

Explanation:

Work in Progress : It is a sum of direct material, direct labor and overhead expense. It shows how much percentage of work is left in the company. The work part left in the company is called work in progress.

For computing the Job 3 work in progress, the calculation part is shown below.

= Direct material + Direct labor + overhead expense

= $30 + $10 + 200% × 10

= $30 + $10 + $20

=$60

Hence, the balance in the Work in Process inventory at the month end is $60